What's in a business plan?
A business plan is a document that details how you will handle all the important aspects of your business. It combines several other plans that can often stand alone.
Use clear and concise language and facts and figures (rather than flowery, emotive language) to appeal to potential investors.
A good business plan identifies where you are, where you want to be, and how to get there. It is a 'living document' that will grow and change with you and your ideas.
The following are the key parts of a business plan.
The executive summary provides an overview of the whole concept for your business. It is the first section of your plan, but it's best to write it last when you have a clear understanding of the direction of your business. It needs to grab the reader's attention (venture capitalists see hundreds of business plans).
The business profile describes your business, including its name, location and purpose. It also often includes information about the business owners, such as their expertise, experience and education, which will underpin the successful operation of the business.
Including a vision and direction for your business is an important step to identify your ambition and where you want to be.
Visioning helps you to:
- capture the direction of where you want to take your business
- communicate your long-term business goals
- reflect the values of your business
- inspire your staff team and key partners.
Generally, your vision statement includes considerations such as:
- business reputation
- service quality standards
- business growth
- passion and ethos
- sustainability (financially and environmentally).
Product or service market analysis
Market analysis identifies, describes and analyses the products and services you offer. It includes your target market, your market share and your competitors. Use this analysis to make decisions about pricing products and services and the location of your business.
After you complete an external analysis, use a SWOT analysis (strengths, weaknesses, opportunities and threats) to help you identify where the greatest opportunities are and how you can reduce barriers to reaching the outcomes you want.
The marketing plan outlines your marketing strategies to attract new clients and keep existing ones. In your marketing plan, consider how your product or service differs from what's already available.
Your marketing plan should take into consideration your target market and which marketing channels (digital, print etc.) are best placed to reach them.
Legal and risk management plan
Your risk management plan should identify things (hazards) that could affect your business. It should also describe what actions you can put in place to reduce the threat and how you will deal with them if they arise. This will help you to identify opportunities for your business and reduce the damage potential threats could cause.
Find out how a business continuity plan can help you prepare for and address risks as part of your overall business plan.
The operating plan summarises how your business works, including information on how your products are made or services are provided. It includes details of your premises and lease terms, equipment, materials, labour, technology and environmental concerns. An operating plan is essential for smooth day-to-day running of your business.
If you're presenting to a potential investor, keep the technological details to a minimum.
Management and personnel plan
The management and personnel plan will review staff functions, job descriptions, human resource policies, workforce planning and training. Your credentials and your staff are crucial in the success of your business.
Your finance plan is important in securing funding and attracting partners, and it's essential that this plan is accurate and shows a short-term return on their investment.
Managing your cash-flow, understanding your costs, understanding taxation and permit requirements, and understanding financial forecasts can make the difference between staying in business and shutting your doors.
The action plan will identify the tasks you need to complete to achieve your goals, including the resources you need.
Try to keep it short – to about 1 page – and consider the practical elements required to reach your goal.
When done simply, a business plan consists of 3 principal stages:
- An assessment of the current situation
- Identification of where you want to be – vision and objectives
- Action – a plan to achieve your vision and objectives.
Make sure you include a clear timeframe for delivery and appoint lead employees to deliver the outcomes.